Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Dell Technologies Inc. (NYSE:DELL) changed recently.
Is DELL a good stock to buy? The best stock pickers were reducing their bets on the stock. The number of long hedge fund positions dropped by 2 lately. Dell Technologies Inc. (NYSE:DELL) was in 60 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 86. Our calculations also showed that DELL isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 62 hedge funds in our database with DELL holdings at the end of June.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind let’s take a gander at the key hedge fund action encompassing Dell Technologies Inc. (NYSE:DELL).
Paul Singer of Elliott Management
Do Hedge Funds Think DELL Is A Good Stock To Buy Now?
At third quarter’s end, a total of 60 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the previous quarter. By comparison, 43 hedge funds held shares or bullish call options in DELL a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Elliott Investment Management was the largest shareholder of Dell Technologies Inc. (NYSE:DELL), with a stake worth $2583.6 million reported as of the end of September. Trailing Elliott Investment Management was Lyrical Asset Management, which amassed a stake valued at $450.1 million. Third Point, Canyon Capital Advisors, and Sachem Head Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Engine Capital allocated the biggest weight to Dell Technologies Inc. (NYSE:DELL), around 26.13% of its 13F portfolio. HighVista Strategies is also relatively very bullish on the stock, setting aside 24.47 percent of its 13F equity portfolio to DELL.
Judging by the fact that Dell Technologies Inc. (NYSE:DELL) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds that slashed their full holdings by the end of the third quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors said goodbye to the biggest stake of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $87.7 million in stock. Himanshu Gulati’s fund, Antara Capital, also said goodbye to its stock, about $32.2 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Dell Technologies Inc. (NYSE:DELL) but similarly valued. These stocks are The TJX Companies, Inc. (NYSE:TJX), Truist Financial Corporation (NYSE:TFC), HCA Healthcare Inc (NYSE:HCA), Zoom Video Communications, Inc. (NASDAQ:ZM), Marsh & McLennan Companies, Inc. (NYSE:MMC), General Motors Company (NYSE:GM), and Fidelity National Information Services Inc. (NYSE:FIS). All of these stocks’ market caps match DELL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TJX | 63 | 2330294 | 7 |
| TFC | 34 | 275906 | -5 |
| HCA | 72 | 3309822 | 12 |
| ZM | 56 | 6003836 | -3 |
| MMC | 42 | 1987176 | 1 |
| GM | 77 | 6416552 | -9 |
| FIS | 69 | 6044245 | -3 |
| Average | 59 | 3766833 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 59 hedge funds with bullish positions and the average amount invested in these stocks was $3767 million. That figure was $6143 million in DELL’s case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand Truist Financial Corporation (NYSE:TFC) is the least popular one with only 34 bullish hedge fund positions. Dell Technologies Inc. (NYSE:DELL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DELL is 54.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on DELL as the stock returned 7.1% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Dell Technologies Inc. (NYSE:DELL)
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Disclosure: None. This article was originally published at Insider Monkey.
